But in keeping with its glorious tradition of meaningless controls where they are least needed, the Indian government has bungled the whole process.

Companies have been told to take a dive with one hand tied behind their backs. The hedger has been denied his very first right -- the freedom to take decisions in tandem with the risks.

Incredibly, hedging has been allowed only against the physical imports of crude oil. No doubt crude prices can be insulated, albeit within the narrow confines of physical deliveries, but product prices or refining margins have been left uncovered, thereby not reducing but multiplying the risks. Crude and product prices tend to move in tandem. And the effect is negative if one segment is "locked in" while the other is allowed to move freely.

Even in a truncated form, hedging in crude would have had its spin-offs. For one, there is greater certainty about foreign exchange requirements and there is the possibility of guarding against adverse price movements by using simple instruments like "price caps" and "zero cost collars".

But a maze of red-tapism has delayed a debut in hedging by Indian Oil Corporation -- the biggest Indian player in the market with a yearly bill of $ 10 billion. The babus in the petroleum ministry are being schooled in the finer points of the art of futures and options. Their consent is required before a foray can be made into the rarefied world of hedging. And that consent is conditional on the bureaucrats' abilties to understand and appreciate the complexities involved.

Some clarifications have been sought from the RBI, but the apex bank still has to respond with an answer.

Indian Oil Corporation says it has been preparing itself for almost a year and its is ready to experiment with some basic covering instruments. That is, of course, if the mandarins in the oil ministry agree and give the go-ahead.

The cost of high crude oil prices to the economy is an issue today. But what about the savings that could have accrued had IOC's hedging operations begun a few months ago when global prices had started their relentless climb ? No one seems to talk about that ! The skillful art of hedging - in other words, the ability to protect your present exposure by taking a position in the forward and futures market -- has always been an intricate and perplexing one. Hedging allows you to insulate your interests -- when they are at the most vulnerable -- from the fluctuations of the market place. The process of hedging requires the highly evolved science of informed speculation to marry with the basic instinct of a prickly hedgehog, so that certainty can be guaranteed by dabbling in the uncertain.

Of course, a cardinal requirement is an in-depth understanding of the dynamics of the market, along with an intrinsic ability to sense how prices will move. And, at the end -- like Exxon-Mobil which has equity stakes spread evenly over producing and refining sectors -- you may well decide not to hedge at all since all risks are adequately covered by the company's global presence in refining and exploration. Such global scales are not for India of course where the biggest challenege is hedgeing against the government's inefficiences.